Levi Strauss & Co. closed the first quarter of 2013 ending February 24th 2013 with a 2% decrease in net revenues compared to the previous year, but also doubled its net income.

As was reported yesterday, net revenues decreased by 2% on both reported and constant-currency bases. The Californian jeanswear company justified this by lower sales in the Asia Pacific region and by the impact of licensing the Levi’s boys business. At the same time, the first quarter net income increased by 117% to $107 million, compared with $49 million in the first quarter of 2012.

“In the first quarter, we generated strong cash flow and posted a higher gross margin and net income, despite slightly lower revenues,” said Chip Bergh, president and chief executive officer at Levi Strauss & Co. “We’re committed to reducing debt and strengthening the balance sheet. Our cash flow and a successful debt refinancing we executed after the quarter closed have allowed us to pay down $185 million of our debt this year.”

Levi’s gross profit in the first quarter increased to $592 million compared with $549 million for the same period in 2012. Gross margin for the first quarter was 52% of revenues compared with 47% of revenues in the same quarter of 2012. As reasons for the gross margin improvement, Levi’s stated the lower cost of cotton, increased sales from the company’s retail stores and a favourable currency impact.

The regional net revenues and operating income for the first quarter of 2013 were reported by Levi Strauss & Co. as follows:

“Net revenues in the Americas were flat, as increased sales from company-operated Levi’s® retail stores were offset by lower wholesale revenues reflecting the company’s 2012 decision to license the Levi’s® brand boys business. Higher operating income primarily reflected the region's higher gross margin.

Net revenues in Europe increased, reflecting continued growth from the company-operated retail network; this was partially offset by a decline in traditional wholesale channels, most notably in Southern Europe. Higher operating income primarily reflected the region's lower SG&A and improved gross margin.

Net revenues in Asia Pacific declined, reflecting lower sales at both company-operated retail network and wholesale channels, due to challenging conditions in most markets in the region, most notably China. Operating income increased, primarily reflecting lower SG&A and the decision to phase out the Denizen® brand [Levi’s local brand for the Asian market, The Editors] in the region.”